Highlights
In June, both income and spending were soft, reflecting slow job growth, a decline in motor vehicle sales, and a decrease in gasoline prices. Inflation news is mixed but more favorable. Personal income in June edged up 0.1 percent, easing from a 0.2 percent rise in May. The market median called for a 0.2 percent rise for the latest month. Wages & salaries were unchanged, following a gain of 0.2 percent the prior month.

On a more favorable note, real disposable personal income increased 0.3 percent in June, compared to no change in May as both inflation was negative and taxes dipped in the latest month.

Year-on-year, headline prices are up 2.6 percent-the same as in May. The core is up 1.3 percent on a year-ago basis, matching May's pace.

Today's report is not does not paint a rosy picture for the consumer sector. But it is not as bad as the headline numbers given the gain in real disposable income and the (hopefully) transitory effects on durables spending (motor vehicle parts shortages).

On the news, equity futures nudged up.

Recent History Of This Indicator
Personal income in May rose 0.3 percent, matching the gain the month before. However, wages & salaries increased a modest 0.2 percent, following a rise of 0.4 percent in April. Personal spending weakened in May, posting at no change, following a 0.3 percent boost the prior month. The slowdown was largely due to a decline in motor vehicle sales as durables dropped 1.5 percent, a drop related to shortages of autos dependent upon Japanese parts. On the inflation front, the PCE price index eased to a 0.2 percent rise from 0.3 percent in April. However, the core rate edged up to 0.3 percent from 0.2 percent in April.

Looking ahead, the private wages & salaries component for June is likely to be soft as aggregate weekly earnings dipped 0.3 percent. PCEs will likely be negative for goods components as retail sales ex autos were flat and unit new motor vehicle sales declined. PCE inflation should be mixed as the headline CPI fell 0.2 percent in June while the core CPI rose 0.3 percent.

This personal income report incorporates standard annual revisions to the National Income and Product Accounts, generally going back three years but sometimes more.

Definition
Personal income is the dollar value of income received from all sources by individuals. Personal outlays include consumer purchases of durable and nondurable goods, and services.
Why Investors Care

Changes in taxes or social security cost of living adjustments can cause some sharp variations in monthly disposable income growth. However, on the whole, monthly changes in disposable income fluctuate less than monthly changes in personal consumption expenditures.Data Source: Haver Analytics

Monthly changes in personal consumption expenditures are usually skewed by large changes in spending on durable goods. Spending on nondurable goods and services tend to be less volatile from one month to the next.Data Source: Haver Analytics